Research on poverty and inequality presented at IMF conference in Washington, D.C.

Poverty and inequality in the context of the pandemic was the subject addressed by Marcelo Neri, the director of FGV Social, at a conference called “Rethinking Fiscal Policy – Global Perspectives,” held by the International Monetary Fund and Peterson Institute for International Economics in Washington, D.C., in May 2023.

The event’s speakers also included Lawrence H. Summers of Harvard University, Gita Gopinath of the IMF, Kenneth Rogoff of Harvard University, Christina Romer of the University of California, Berkeley, and White House economic advisor Heather Boushey.

Neri took part in a session called “Helping People,” during which he presented a paper of his titled “Brazilians during the Pandemic and Beyond,” showing that during the pandemic and after, in 2022, income inequality in Brazil fell to the lowest level since current records began in 1976. Likewise, during the pandemic, extreme poverty fell to the second lowest level recorded since 1976, before rising to the third lowest level in 2022.

The study also showed that poverty clearly fluctuated in line with the electoral timetable of 12 Congressional, state gubernatorial and presidential elections. In election years, poverty invariably fell, before generally rising again the following year. The 2022 elections followed this trend. Poverty was 31.9% lower in 2022 than in 2021, and it was 26.1% lower in the last quarter of 2022 than in the first quarter of 2022.

Neri found that the main transmission channel for the changes in 2020 and 2022 in income-based social indicators was higher cash transfers through welfare programs. The pandemic and the elections left permanent marks on the size and design of these programs. Resources earmarked for income transfers to combat poverty rose from 1% to 2.5% of GDP. Neri also identified a 45% reduction in poverty targeting compared to the pre-pandemic period. In addition, the government’s decision to distribute a minimum benefit to each poor household, regardless of its size, caused single-person households to grow 73% one year after the adoption of this measure.

Adjustments clearly need to be made to the design of payment systems for anti-poverty programs and also to conditions for participating in the Family Grant Program, in order to help heal the scars of the “COVID generation,” such as the 400% increase in the vaccination gap among children and the 14-year setback in school performance.

You can watch Neri’s presentation in this video: